Teo Seng Capital Bhd
One of the best performing poultry stocks is Teo Seng, the third largest egg producer in the country.
Closing at 48.5 sen last Friday, the counter has gained 14.1% over the past year. It had a market capitalisation of RM97 million and a trailing price-earnings ratio (PER) of 5.31 times. Its book value at end-June was 52 sen, placing the stock at a price-to-book ratio of 0.93 times.
An integrated poultry company, Teo Seng produces 2.2 million eggs daily and is involved in layer farming, manufacturing and marketing of paper egg trays, animal feeds and distribution of animal health products.
Since its listing on the then Second Board of Bursa in 2008 until 2011, Teo Seng has chalked up compound annual growth rates (CAGR) for revenue and net profit of 9.2% and 20.8%.
For its 1QFY12 ended June, Teo Seng’s net profit increased year-on-year (y-o-y) to RM4.76 million from RM4.19 million previously, while its revenue grew to RM61.28 million from RM43.72 million.
Huat Lai Resources Bhd and TPC Plus Bhd
Among the next best performers were Huat Lai and TPC Plus. Industry observers say that once Huat Lai’s acquisition of TPC Plus goes through, both companies will enjoy better financial results from better economies of scale.
Last month, Huat Lai proposed to acquire a 35.65% stake in TPC Plus for RM8.08 million from London Biscuits Bhd.
Huat Lai, with a trailing PER of 3.72 times and market capitalisation at RM185.6 million, was up by 45.3% to RM2.15 from a year ago. It is trading 34% above its book value of RM1.61 as at end-June.
An integrated poultry operator, Huat Lai is Malaysia’s top egg producer with a daily output of three million eggs, while TPC, which focuses on eggs, produces 500,000 eggs daily.
Huat Lai’s revenue has been on an upward trend over the past five years, reaching RM611.76 million in 2010 from RM220.25 million in 2006.
However, its profit trend has been inconsistent, but results were promising in the last two years.
Huat Lai returned from a net loss of RM8.96 million in 2006 to a net profit of RM2.12 million in 2007, before going into the red again with a net loss of RM12.56 million in 2008 and then returning to a net profit of RM10.4 million in 2009 and RM24.59 million in 2010.
TPC had a decent share price increase of 18.8% from a year ago to 28.5 sen last Friday. It had trailing PER of 17.27 times and market capitalisation of RM22.8 million — one of the smallest among poultry counters. As at end-September, its book value was 39 sen.
TPC was loss-making from FY06 to FY09. But, for the 18 months from Jan 1, 2010 to June 30, 2011 (TPC changed its FY from Dec 31 to June 30, this year), the company posted a revenue of RM73.55 million and net profit of RM605,000.
Farm’s Best Bhd
Farm’s Best’s stock was up by 38.6% from last year, closing at 79 sen last Friday. The company has enjoyed strong earnings in the past few quarters and has a trailing PER of 3.35 times and a relatively small market capitalisation of RM43.87 million. The stock is also trading at less than half its book value of RM1.58, as at end-June.
Farm’s Best has poultry operations spanning hatchery operations, feed, poultry processing, medications and vaccines, and food products (nuggets, burgers, sausages and so on).
It recently entered into two sale and purchase agreements to acquire two broiler farms in Negri Sembilan.
The two farms have a total capacity of 400,000 birds and are expected to produce about 2.2 million broilers a year, which will increase Farm’s Best’s broiler production by about 6%, the company told TEFD.
Annual revenue from the farms is expected to be about RM16 million and contributions will be from 1Q12 onwards.
Farm’s Best said its live broiler sales and processed poultry accounted for about 97% of its revenue with the rest coming from egg production.
For its 2QFY11 ending June, it reported a 103% y-o-y increase in net profit to RM4.24 million from RM2.09 million previously. Revenue climbed 16.5% to RM94.92 million from RM81.5 million a year ago.
Revenue and net profit for the first six months of 2011 stood at RM189.38 million and RM7.25 million, respectively.
Notably, Farm’s Best’s net profit for the first half of 2011 has more than doubled compared with the full year’s total for 2010.
The company returned to the black in 2010 with a net profit of RM3.6 million from a loss of RM4.64 million in 2009, although revenue declined to RM331.16 million from RM346.34 million.
The improved results were due to the softened prices of imported feed, it said.
CAB Cakaran Corp Bhd
CAB is mainly involved in integrated poultry farming and processing. Its stock has climbed 11.1% since last year to close at 35 sen last Friday.
It traded at a trailing PER of 4.13 times and had a market capitalisation of RM46.1 million. As at end-June, its book value was 71 sen.
After climbing out from a net loss of 10.73 million in FY06 ending Sept 30, CAB’s financial results have been promising.
For its FY10, its net profit increased y-o-y to RM7.7 million from RM22,828 previously, while revenue increased to RM508.15 million from RM494.42 million, due to higher average ex-farm price of broilers and better cost management, said the company.
Also due to better profit margins in broilers, CAB in its 3QFY11 ending June, posted a 107.5% increase in net profit to RM4.44 million from RM2.14 million a year ago. Revenue dipped marginally to RM122.29 million from RM123.05 million previously.
Its poultry operations accounted for almost 90% of revenue in 2010. It also has operations in restaurant & franchising and marine products manufacturing but these divisions suffered losses in 2010 with pre-tax losses of RM180,000 and RM400,000, respectively.
Lay Hong Bhd
Lay Hong is the fourth largest egg producer at 1.5 million eggs daily. Its stock increased slightly by 2.3% since last year to close at RM1.79 last Friday.
It has a market capitalisation of RM88.9 million and traded a trailing PER of 5.6 times.
Its book value at the end of June was RM2.53.
The company has reported consecutive y-o-y increases in net profit and revenue since FY08. For the FY11 ended March, it reported a 43% y-o-y increase in net profit to RM14.76 million from RM10.33 million. Revenue increased to RM423.11 million from RM388.75 million last year.
An integrated poultry company, Lay Hong is mainly involved in the production of eggs, broiler breeding and farming and feedmill activities. In Aug 2010, QL Resources Bhd bought a 23.29% stake in Lay Hong Bhd for RM48.55 million, or RM1.05 per share, from London Biscuits Bhd.
QL Resources Bhd
Integrated and diversified agriculture player QL Resources is highly regarded by analysts and won The Edge Billion Ringgit Club’s “Company of the Year” award for 2011.
Its share price only increased marginally by 0.3% since last year to close at RM2.93 last Friday, but it has been enjoying double-digit growth for the past decade. In its first 10 years as a listed company — from 2000 to 2010 — the company achieved a 10-year average return on equity (ROE) of 23% as well as a 23% annual gain in its share price.
At current prices, the stock is trading at a trailing PER of 18.8 times and has a market capitalisation of RM2.44 billion. Its book value as at end-June was 92 sen.
QL is the second largest producer of eggs in Malaysia with a production of 2.7 million eggs daily. The livestock division accounted for roughly 56% or RM991.03 million of its total revenue in FY2011.
The company’s other activities are surimi or fish paste manufacturing and palm oil.
QL’ s growth over the past five years has been impressive. Its CAGR from 2007 to 2011 for revenue and net profit was 12.3% and 18% respectively.
For FY11, it posted net profit of RM124.55 million on revenue of RM1.78 billion.
Leong Hup Holdings Bhd
Leong Hup Holdings’ (LHH) stock fell by 4.2% to RM1.60 from a year ago. It had a market capitalisation of RM283.3 million and a trailing PER of 5.2 times. Its book value at the end of June stood at RM2.37.
One of the industry’s largest and oldest players, LHH is the biggest day-old chick producer and also the biggest broiler distributor in Malaysia, industry sources say.
Its key activities are breeding and rearing of parent stocks, broiler day-old chicks, contract farming, slaughtering and processing of broiler chickens and retailing.
LHH also has a 27.74% effective ownership in Teo Seng, according to its 2011 annual report.
LHH has a 0.62% direct stake in Teo Seng, while its 51% owned subsidiary, Advantage Valuations Sdn Bhd has a 51.12% stake in Teo Seng.
For FY11 ended March 31, LHH’s revenue rose 18.4% to RM1.35 billion from RM1.14 billion in FY10. Net profit climbed by 40.4% to RM47.91 million from RM34.12 million previously.
For its 1QFY12 ended June, LHH reported a y-o-y jump in net profit to RM14.2 million from RM10.05 million previously. Revenue increased to RM420 million from RM294.8 million a year ago.
LTKM Bhd
Closing at RM1.89 last Friday, LTKM’s share price was up only by a marginal 0.5%. But its share price has been rising and more than doubled since 2009.
LTKM had a trailing PER of 5.1 and a market capitalisation RM82 million last Friday. It was trading 37% below its book value of RM3 (as at end-June).
With operations predominantly in egg production, LTKM is Malaysia’s fifth largest egg producer with an output of 1.2 million eggs a day.
In the period from 2007 to 2011, its CAGR for revenue and net profit was 15.2% and 31%.
The company is also involved in the mining and trading of sand, and manufacturing and sale of processed glass.
But both activities accounted for less than 3% of its FY11 revenue.
In its FY11 ending March, LTKM posted a net profit of RM16.01 million on the back of RM150.49 million in revenue.
For its FY10, its net profit increased to RM7.7 million from RM22,828 previously, while revenue increased to RM508.15 million from RM494.42 million, which the company attributed to higher average ex-farm price of broilers and better cost management.
This article appeared in The Edge Financial Daily, November 14, 2011.
One of the best performing poultry stocks is Teo Seng, the third largest egg producer in the country.
Closing at 48.5 sen last Friday, the counter has gained 14.1% over the past year. It had a market capitalisation of RM97 million and a trailing price-earnings ratio (PER) of 5.31 times. Its book value at end-June was 52 sen, placing the stock at a price-to-book ratio of 0.93 times.
An integrated poultry company, Teo Seng produces 2.2 million eggs daily and is involved in layer farming, manufacturing and marketing of paper egg trays, animal feeds and distribution of animal health products.
Since its listing on the then Second Board of Bursa in 2008 until 2011, Teo Seng has chalked up compound annual growth rates (CAGR) for revenue and net profit of 9.2% and 20.8%.
For its 1QFY12 ended June, Teo Seng’s net profit increased year-on-year (y-o-y) to RM4.76 million from RM4.19 million previously, while its revenue grew to RM61.28 million from RM43.72 million.
Huat Lai Resources Bhd and TPC Plus Bhd
Among the next best performers were Huat Lai and TPC Plus. Industry observers say that once Huat Lai’s acquisition of TPC Plus goes through, both companies will enjoy better financial results from better economies of scale.
Last month, Huat Lai proposed to acquire a 35.65% stake in TPC Plus for RM8.08 million from London Biscuits Bhd.
Huat Lai, with a trailing PER of 3.72 times and market capitalisation at RM185.6 million, was up by 45.3% to RM2.15 from a year ago. It is trading 34% above its book value of RM1.61 as at end-June.
An integrated poultry operator, Huat Lai is Malaysia’s top egg producer with a daily output of three million eggs, while TPC, which focuses on eggs, produces 500,000 eggs daily.
Huat Lai’s revenue has been on an upward trend over the past five years, reaching RM611.76 million in 2010 from RM220.25 million in 2006.
However, its profit trend has been inconsistent, but results were promising in the last two years.
Huat Lai returned from a net loss of RM8.96 million in 2006 to a net profit of RM2.12 million in 2007, before going into the red again with a net loss of RM12.56 million in 2008 and then returning to a net profit of RM10.4 million in 2009 and RM24.59 million in 2010.
TPC had a decent share price increase of 18.8% from a year ago to 28.5 sen last Friday. It had trailing PER of 17.27 times and market capitalisation of RM22.8 million — one of the smallest among poultry counters. As at end-September, its book value was 39 sen.
TPC was loss-making from FY06 to FY09. But, for the 18 months from Jan 1, 2010 to June 30, 2011 (TPC changed its FY from Dec 31 to June 30, this year), the company posted a revenue of RM73.55 million and net profit of RM605,000.
Farm’s Best Bhd
Farm’s Best’s stock was up by 38.6% from last year, closing at 79 sen last Friday. The company has enjoyed strong earnings in the past few quarters and has a trailing PER of 3.35 times and a relatively small market capitalisation of RM43.87 million. The stock is also trading at less than half its book value of RM1.58, as at end-June.
Farm’s Best has poultry operations spanning hatchery operations, feed, poultry processing, medications and vaccines, and food products (nuggets, burgers, sausages and so on).
It recently entered into two sale and purchase agreements to acquire two broiler farms in Negri Sembilan.
The two farms have a total capacity of 400,000 birds and are expected to produce about 2.2 million broilers a year, which will increase Farm’s Best’s broiler production by about 6%, the company told TEFD.
Annual revenue from the farms is expected to be about RM16 million and contributions will be from 1Q12 onwards.
Farm’s Best said its live broiler sales and processed poultry accounted for about 97% of its revenue with the rest coming from egg production.
For its 2QFY11 ending June, it reported a 103% y-o-y increase in net profit to RM4.24 million from RM2.09 million previously. Revenue climbed 16.5% to RM94.92 million from RM81.5 million a year ago.
Revenue and net profit for the first six months of 2011 stood at RM189.38 million and RM7.25 million, respectively.
Notably, Farm’s Best’s net profit for the first half of 2011 has more than doubled compared with the full year’s total for 2010.
The company returned to the black in 2010 with a net profit of RM3.6 million from a loss of RM4.64 million in 2009, although revenue declined to RM331.16 million from RM346.34 million.
The improved results were due to the softened prices of imported feed, it said.
CAB Cakaran Corp Bhd
CAB is mainly involved in integrated poultry farming and processing. Its stock has climbed 11.1% since last year to close at 35 sen last Friday.
It traded at a trailing PER of 4.13 times and had a market capitalisation of RM46.1 million. As at end-June, its book value was 71 sen.
After climbing out from a net loss of 10.73 million in FY06 ending Sept 30, CAB’s financial results have been promising.
For its FY10, its net profit increased y-o-y to RM7.7 million from RM22,828 previously, while revenue increased to RM508.15 million from RM494.42 million, due to higher average ex-farm price of broilers and better cost management, said the company.
Also due to better profit margins in broilers, CAB in its 3QFY11 ending June, posted a 107.5% increase in net profit to RM4.44 million from RM2.14 million a year ago. Revenue dipped marginally to RM122.29 million from RM123.05 million previously.
Its poultry operations accounted for almost 90% of revenue in 2010. It also has operations in restaurant & franchising and marine products manufacturing but these divisions suffered losses in 2010 with pre-tax losses of RM180,000 and RM400,000, respectively.
Lay Hong Bhd
Lay Hong is the fourth largest egg producer at 1.5 million eggs daily. Its stock increased slightly by 2.3% since last year to close at RM1.79 last Friday.
It has a market capitalisation of RM88.9 million and traded a trailing PER of 5.6 times.
Its book value at the end of June was RM2.53.
The company has reported consecutive y-o-y increases in net profit and revenue since FY08. For the FY11 ended March, it reported a 43% y-o-y increase in net profit to RM14.76 million from RM10.33 million. Revenue increased to RM423.11 million from RM388.75 million last year.
An integrated poultry company, Lay Hong is mainly involved in the production of eggs, broiler breeding and farming and feedmill activities. In Aug 2010, QL Resources Bhd bought a 23.29% stake in Lay Hong Bhd for RM48.55 million, or RM1.05 per share, from London Biscuits Bhd.
QL Resources Bhd
Integrated and diversified agriculture player QL Resources is highly regarded by analysts and won The Edge Billion Ringgit Club’s “Company of the Year” award for 2011.
Its share price only increased marginally by 0.3% since last year to close at RM2.93 last Friday, but it has been enjoying double-digit growth for the past decade. In its first 10 years as a listed company — from 2000 to 2010 — the company achieved a 10-year average return on equity (ROE) of 23% as well as a 23% annual gain in its share price.
At current prices, the stock is trading at a trailing PER of 18.8 times and has a market capitalisation of RM2.44 billion. Its book value as at end-June was 92 sen.
QL is the second largest producer of eggs in Malaysia with a production of 2.7 million eggs daily. The livestock division accounted for roughly 56% or RM991.03 million of its total revenue in FY2011.
The company’s other activities are surimi or fish paste manufacturing and palm oil.
QL’ s growth over the past five years has been impressive. Its CAGR from 2007 to 2011 for revenue and net profit was 12.3% and 18% respectively.
For FY11, it posted net profit of RM124.55 million on revenue of RM1.78 billion.
Leong Hup Holdings Bhd
Leong Hup Holdings’ (LHH) stock fell by 4.2% to RM1.60 from a year ago. It had a market capitalisation of RM283.3 million and a trailing PER of 5.2 times. Its book value at the end of June stood at RM2.37.
One of the industry’s largest and oldest players, LHH is the biggest day-old chick producer and also the biggest broiler distributor in Malaysia, industry sources say.
Its key activities are breeding and rearing of parent stocks, broiler day-old chicks, contract farming, slaughtering and processing of broiler chickens and retailing.
LHH also has a 27.74% effective ownership in Teo Seng, according to its 2011 annual report.
LHH has a 0.62% direct stake in Teo Seng, while its 51% owned subsidiary, Advantage Valuations Sdn Bhd has a 51.12% stake in Teo Seng.
For FY11 ended March 31, LHH’s revenue rose 18.4% to RM1.35 billion from RM1.14 billion in FY10. Net profit climbed by 40.4% to RM47.91 million from RM34.12 million previously.
For its 1QFY12 ended June, LHH reported a y-o-y jump in net profit to RM14.2 million from RM10.05 million previously. Revenue increased to RM420 million from RM294.8 million a year ago.
LTKM Bhd
Closing at RM1.89 last Friday, LTKM’s share price was up only by a marginal 0.5%. But its share price has been rising and more than doubled since 2009.
LTKM had a trailing PER of 5.1 and a market capitalisation RM82 million last Friday. It was trading 37% below its book value of RM3 (as at end-June).
With operations predominantly in egg production, LTKM is Malaysia’s fifth largest egg producer with an output of 1.2 million eggs a day.
In the period from 2007 to 2011, its CAGR for revenue and net profit was 15.2% and 31%.
The company is also involved in the mining and trading of sand, and manufacturing and sale of processed glass.
But both activities accounted for less than 3% of its FY11 revenue.
In its FY11 ending March, LTKM posted a net profit of RM16.01 million on the back of RM150.49 million in revenue.
For its FY10, its net profit increased to RM7.7 million from RM22,828 previously, while revenue increased to RM508.15 million from RM494.42 million, which the company attributed to higher average ex-farm price of broilers and better cost management.
This article appeared in The Edge Financial Daily, November 14, 2011.
